The exercise of an in-the-money option by the clearing firm (Options Clearing Corporation) as a measure of protection for the holder of the expiring option. It can be compared to an insurance policy for the option holder.[click to read more]

The hedge or risk reduction provided by a position as compared to owning/shorting the underlying stock outright. This is a common term in buy-write (covered call) and short put strategies.[click to read more]

The Calculated numbers that equals the delta of a given option. This ratio is calculated for a trade to hedge a a trading position with the same number of opposite financial instruments [click to read more]

A commonly used hedging strategy for short sellers that involves purchase of call contracts against the short position held in the underlying asset. This strategy protects any risk involved due to an upside move in the underlying asset.[click to read more]

Risk covering strategy to protect downside risk in long stocks by purchasing put against it. Although this does provide a portfolio hedge, performance has shown to be very poor due to the high hedging cost when buying the protective put(s).[click to read more]

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